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By April 19, 89% of American rental households made a full or partial payment toward their monthly rent. Analyzed through the National Multifamily Housing Council’s rent payment tracker of 11.5 million professionally managed units, that figure accounts for a payment rate of 95% compared to the same time last month, when 93% of tenants had paid rent. It also lags only slightly behind rent collection for the same period a year ago.
“[Payments are] up slightly from last week and up quite a bit from the first week [of April],” said Caitlin Walter, NMHC’s vice president of research during a webinar yesterday. “What does that mean? While we are still not where we were in normal times, each week the payment rate compared to normal time has gradually increased.”
The data reflects total occupied units in a variety of property types barring affordable developments, military and student housing.
Despite the spiking jobless claims, one reason for the steady growth in April’s rent payments is the distribution of the CARES Act stimulus checks, which one in four Americans have indicated to use on housing in a Creditful.com survey.
“It is encouraging that apartment residents continue to meet their rent obligations whether that’s with the support of the federal relief funds, credit cards and alternative, flexible options provided by the industry’s owners and operators,” said NMHC President Doug Bibby.
Landlords across the country have waived late fees and implemented incremental payment plans, while some tenants have flocked to online payment platforms. For example, Bell Partners, which operates multifamily complexes around the nation, has seen e-payments in April spike from 67% to 82%, said Lili Dunn, the company’s president.
The higher than expected payment rate this month might also stem from the strong conditions in the rental market prior to the coronavirus outbreak, mainly low vacancy rates and quickly appreciating rents.
“Going into this pandemic, the apartment industry was well positioned,” said Dunn. “Occupancy rates were near a 20-year high.”
Some metros are performing better than others
Cities that are grappling with large COVID-19 outbreaks or wide-reaching layoffs are home to residents struggling particularly hard to cover their bills.
Some of those locales include New York and New Orleans (which have turned into pandemic hot spots) as well as Las Vegas (where tourism and hospitality have ground to a stop), said Greg Willett, chief economist of property management and data firm RealPage.
Amid the coronavirus crisis, cities where rent payment rates have remained healthy – or even on par with precedent – boast local economies dominated by the tech segment and the federal government, including the military.
“Those are employment sectors that are holding up pretty well,” said Robert Hart, president & CEO of TruAmerica Multifamily, which specializes in mid-tier rental properties.
He singled out Sacramento, Calif., San Diego, Calif., Raleigh, N.C. and Virginia Beach, S.C. as markets where the current pace of rent payments deviates little or not at all from what would be considered typical.
Dunn added Seattle, Wash., to the list of best performers despite the region’s high incidence of COVID-19 infections early on in the virus’s spread in the U.S.
“High tech areas have done amazingly well,” Dunn said. “Those folks are already used to flexible work arrangements and, I think, there’s clearly a demand for their skills. So, maybe there’s not as much pressure on their employment situation.”
Differences between property types
The so-called Class C rental properties, or those that tend to be older than the general stock, rest in not-so-desirable locations and offer relatively low rent, may strain to maintain their cash inflows. That is because of the job losses encumbering their tenants, who are often minimum-wage earners with little to no savings.
Swanky downtown apartment high-rises, however, are also bearing coronavirus-induced economic stress. Such developments tend to reserve their street-level spaces for businesses – from offices to boutiques to eateries – that are now increasingly forgoing rent as a means to preserve funds.
“Our ancillary retail spaces within apartment communities have been hit very hard,” said Dunn. “That’s quite a different story.”
Moreover, some residents are turning away from multi-story communities where hundreds – and sometimes thousands – of occupants share common features such as amenities, elevators and even air circulation systems that could exacerbate the spread of the virus.
The near future may not be as encouraging
Despite the surprisingly strong national rent payment rate this month, May could shift the tide, bringing more challenges and uncertainties to the country’s economy, at large, and the rental industry, in particular.
“May will be quite telling,” said Dunn. “There are folks facing financial hardships that they’re really just now realizing and many of those don’t qualify for federal relief.”
NMHC President Bibby echoed that notion, saying “for that reason, lawmakers need to act now to enact a direct renter assistance program,” which industry groups have been advocating for.
At the same time, Hart, of TruAmerica, said that landlords need to continue to adopt creative methods to help their tenants. For instance, in TruAmerica property offices, which provide access to regularly cleaned computers, residents may request assistance with filing for unemployment benefits.
“We are offering our services that will help [renters] get ahead of the game in addition to all the payment plans,” Hart said.